Futures in New York climbed near $107 a barrel after losing more than 8% over the prior two sessions. The war is already taking its toll on Russian production, which fell below 11 million barrels a day in the second half of March, while deliveries to refineries slid about 11%. Supply is starting to show a “significant decline relative to the beginning of the month,” consultant OilX said in a note.
While Russia has offered to “fundamentally cut back” its military operations in northern Ukraine, a person close to the Kremlin said that doesn’t mean a cease-fire or a complete withdrawal of troops from around Kyiv. The U.S. also cautioned about declaring progress.
The war has triggered huge price moves in the oil market, spurring massive volatility and forcing some traders to head for the exit. That in turn has led to even bigger swings — global benchmark Brent has moved by $5 or more in 23 of the past 24 trading sessions.
“Markets remain skeptical of an immediate cease-fire but it continues to head in the right direction,” said Keshav Lohiya, founder of consultant Oilytics. Russian production outages “will quickly snowball if the current situation continues, despite increased buying from Asia.”
OPEC+ meets on Thursday to discuss its supply policy for May, with the group expected to stick with its strategy of modest output boosts even as the war in Ukraine disrupts flows.
In the U.S., the American Petroleum Institute reported that nationwide crude inventories fell by 3 million barrels last week, according to people familiar with the figures. The Energy Information Administration will release official data later on Wednesday.